European Markets Fall On Disappointing Earnings, Weak Commodities - European Commentary

Source: RTT News : European Market Update

The European markets fell for the first time in four days on Tuesday, as disappointing earnings reports from companies such as Dassault Systemes, UBS and Royal KPN hurt investor sentiments and falling crude oil and metal prices hit energy and mining stocks.

Investors also waited warily for a decision on interest rate policy from the U.S. Federal Reserve, which is meeting Tuesday and Wednesday. The Fed is widely expected to cut rates by a quarter percentage point to 4.5%.

Crude for December delivery fell $1.59 to $91.94 a barrel on the New York Mercantile Exchange after Mexico's state oil company said it will resume production and on expectations that a U.S. government report will show crude supplies grew last week.

The FTSEurofirst 300 index of pan-European blue chips closed 0.42% lower at 1,581.58 points, while the narrower DJ Stoxx 50 index fell 0.53% to 3,852.31 points.

Around Europe, the U.K.'s FTSE 100 index dropped 0.70% to 6,659.00, while France's CAC 40 index slipped 0.55% to 5,803.93 and Germany's DAX index fell 0.40% to 7,977.94.

Dsesign software maker Dassault Systemes dropped 6.4% after the company reported a 24% decline in third quarter earnings and cut its full year earnings and sales forecast.

UBS, Switzerland's, slipped 1.6% after the company reported its first quarterly loss in almost five years on writedowns tied to the U.S. mortgage market.

Royal KPN, the Netherlands' largest phone company, slid 5.6% after the company's third quarter earnings and sales missed analysts' estimates.

Michelin, the world's second largest tiremaker, dropped 6.6% after the company's third quarter sales trailed analysts' forecast.

Heavily weighted oil stocks edged lower after crude oil prices retreated. BP, Europe's biggest oil company, dropped 1.8%, while Royal/Dutch Shell, the second biggest, slipped 1.5% and Total, the third biggest, fell 0.6%.

Similarly, mining stocks lost ground after copper, nickel, lead, zinc and aluminum prices declined in London. BHP Billiton, the world's biggest miner, slipped 2.7%, while Rio Tinto, the third biggest, fell 1.6% and copper miner Antofagasta dropped 3.1%.

Continental, Europe's second largest tiremaker, fell 1.9% after the company said it will raise 1.5 billion euros from a share sale to help fund its purchase of Siemens's auto-parts unit.

On the other hand, Vinci, the world's biggest construction company, surged up 5.1% after the Financial Times reported that French billionaire Francois Pinault and ArcelorMittal may join forces to make a bid for Vinci.